patrick.barnes

We won't know 100% until Monday. So... Not really a long wait.

Don't know how they get people off the Pd without pissing them off, though.

dlesin

The people that would be removed from the program (read: pissed off) were never supposed to be there to begin with. Having a product that was originally meant to be exclusive then having the flood gates opened to pretty much anyone with a good credit history and decent income that could cough up the AF entirely screwed up the product they wanted to have. Imagine having finally been invited to centurion then finding out a year later anyone with an 800 fico and low 6 figure income could call in and get the card, something tells me the existing customer base would be less then pleased with their newfound brethren inevitably diluting their beloved product and then having Amex realize "well crap what do we do now"

GrnLantern

I see.

Thank you all for the answers.

Disappointing, but it is what it is. Maybe Chase/JPM will leave me pleasantly surprised.

AAdmiral

It's simple. Option 1) raise annual fees to a level that most people would dropout or cancel. Option 2) JPM create the Palladium Reserve and only "invite" JPM PB customers to apply for the new card.

Under option 1 JPM could raise fees to 4x's the $595 for non-JPM or CPC clients to $2380 which would put it at Amex Centurion level AF fees. For Chase CPC clients they would give them 50% discount off the $2380 on annual fees to $1190 and finally rebate JPM PB clients so the fee wouldn't change from $595. I think that this couldn't be done asap as the Card Act I think requires at least a year notice on fee changes.

Under option 2 JPM could simply create a new higher version of the Palladium card and only "invite" JPM PB clients to this card and let the current Palladium card stay the way it is or once the PB clients convert up, JPM forces all remaining card holders to transition to the CSR.

GrnLantern

Yeah, the accidental flood gates for Palladium were pretty bad early on.

I just don't think the solution is to create a new one higher above Palladium. I'd turn Palladium into something that prices the stragglers out on the basis that if you don't want to pay $X thousand in AF's then you can downgrade to the new CSR card which is cheaper than the current/old Palladium, and has even better benefits.

dlesin

They don't look at cards for the PB from the lets maximize margins perspective (I think) the fees they net from AUM essentially subsidize the cards in addition to the AF they collect. They want customer loyalty and if they have to move the money over from what they collect on the management fee to pay for perks on the card it will help them keep business in the long run. This isn't the payday loan segment of the population they're appealing to, the need to extract every last penny won't ultimately get them to where they want to be with the clientele.

AAdmiral

Exactly! JPM PB isn't interested in just collecting AF on a premium credit card or people churning because of a great introduction offer. They leave that to the Chase retail division and that is why the CSR is coming. JPM PB goal is to increase AUM either by keeping current clients happy with a better product and tempting new clients to bring their relationship over to JPM PB due to the new offerings.

patrick.barnes

I'm talking about legitimate CPC customers whom you seem to (maybe?) have said will not be able to get the JPM Reserve.

What happens to them?

dlesin

Those customers will get the CS(R), the CS(R) isn't going to be a second rate terrible product it's just meant for a different market. Chase as the retail side of the bank has the ability to recommend an account be turned over from CPC to Private Banking and if PB thinks it's an account is worth their time so to speak they might invite that CPC member to have a Reserve as a way to make them feel appreciated and want to pay the back end fees that come with having a relation with the private bank.

patrick.barnes

I think you guys are oversimplifying this as that's just not how viable credit card products work. Obviously I don't have figures on how much they can afford to lose providing the magical Cent equivalent, so who knows.

I want to be surprised as much as the next person, but their track record with the Pallidium isn't exactly great.

AAdmiral

It's not rocket science. JPM PB gets fees from AUM. They can use that to subsidize the card. If a person with $10 million plus in assets decides to change their private bank relationship to JPM because of this new product then mission accomplished as the goal is to grow AUM at JPM PB. Maybe that is why Amex Centurion now charges an initiation fee of $5000 to new Centurion card holders as they were losing money as well as annual fees of $2500. When I got my Centurion card in 1999 it was $1500, no initiation fee and a lot more benefits and probably didn't have nearly as many card holders as they have today.

dlesin

It's by no means a mass market card it doesn't really have to generate any profit and I think that running a loss on the card but making big fees on the management makes it worthwhile for them. So they might be in the red on one end of the spectrum but if all it takes to break even on that is shifting a small amount of the management profit over to the card business, seems like a worthwhile way to build a banking relationship to me.

mia

It's arithmetic.

If the marketing objective is 1,000 cardholders it literally doesn't matter if the card loses money because the aggregate amount is small.

If the objective is 100,000 cardholders (like Centurion) the fees will generate a substantial budget and the card may support itself, because most cardholders will not use most benefits.

The problem is that they are probably aiming for a number in between, 10, 20, 30,000. That's too small to support itself and too big to subsidize without recurring justification. 10,000 accounts, $1,000 subsidy, is a $10 million loss that someone's budget has to absorb and someone has to justify each year. That leads to tweaking, and the sense that the issuer is devaluing or failing to deliver on implicit marketing promises.

patrick.barnes

You guys are forgetting that this was the *exact* reasoning for the Pallidium in the first place. Before the backdoor and then trying to broaden the base with CPC.

What's different this time? A higher AF? And?

A Cent is 10k initial+2.5k/year+AU fees. And there are probably 100x more Cents *worldwide* than there are potential JPM Reserve holders (I say potential because you seem to think every PB client will want this thing. Doubtful to begin with.)

Again, I want this to succeed. I just don't think you guys are applying enough skepticism given what's happened previously.

TL;DR: what mia said above.

GrnLantern

+1 to what mia said.

If I was planning this transition, I'd aim to unconverted as many qualified (based on income, not necessarily PB relationship) Palladium holders as possible in an effort to subsidize the population of "Reserve" cards. Those who don't see the value, and choose not to upgrade, aren't the appropriate target audience anyway.